Connecticut Goes After Student Loan Assistance Company and This May Impact You

In a move that could create issues for student loan assistance companies who operate in Connecticut, the State has gone after Leonardi Ortiz who is/was doing business as Student Reform Associates.

Some have said student loan assistance companies are not settling debt because they are simply acting as documentation preparation companies and not negotiating a reduction in the debt owed. Any reduction of debt owed through enrollment in federal student loan programs is a function of an administrative process and not an interference in the relationship between the borrower and lender.

According to the facts presented by the State of Connecticut they certainly have a much different take on this issue.

The State has alleged the company violated Part II of Chapter 669 of the Connecticut General Statutes, “Debt Adjusters and Debt Negotiation”.

The facts published in this case say:

Respondent has made a Fictitious Business Name filing with the Recorder/County Clerk in San Diego County, California, and reports a business address of 4275 Executive Square, Suite 200, La Jolla, California.

From at least September 2014 to April 2016, Respondent offered, for or with the expectation of a fee, to assist at least two Connecticut debtors negotiate the terms of their student loan debt.

From at least April 2015 to April 2016, Respondent maintained a website at www.studentreformassociates.org offering to assist consumers in “Reducing your actual Total Student Loan Debt”, “Obtain a better interest rate” and student loan debt consolidation. It also represented that it “saved . . . customers an average of 73% in their Student Loan Debt”.

In September 2014, a Connecticut resident (“Connecticut Resident”) had conversations with Mark Workman on behalf of Respondent who had represented to the Connecticut Resident that Respondent could assist in lowering student loan monthly payments and enroll the Connecticut Resident in a student loan forgiveness program that would cause any outstanding student loan balance to be forgiven after 10 years. As a result, on September 11, 2014, the Connecticut Resident entered into an Agreement with Respondent via the Internet for a Federal Student Loan Consolidation with the Department of Education for a fee of 8 payments of $208.11. The Agreement represented that the new loan payment would be $42 for 10 years and that the consolidation was 100% guaranteed or the Connecticut Resident could receive his money back.

On September 18, 2014, a relative of Connecticut Resident, also a Connecticut resident, entered into an Agreement with Respondent via the Internet for a Federal Student Loan Consolidation with the Department of Education for a fee of 8 payments of $103.59. The Agreement represented that the new loan payment would be $169.22 for 10 years and that the consolidation was 100% guaranteed or the relative could receive her money back.

In connection with the two Agreements, from September 2014 to April 2015, the Connecticut Resident made 9 payments of $208.11 and 9 payments of $103.59 totaling $2,805.30 to Respondent.

At no time relevant hereto has Respondent been licensed to engage or offer to engage in debt negotiation in this state, nor did Respondent qualify for an exemption from such licensure.

On or about December 21, 2015, the Connecticut Resident filed a complaint with the Attorney General’s Office that, contrary to the representations made by Respondent, his student loan monthly payments increased and he had not been enrolled in a student loan forgiveness program. The Connecticut Resident also complained that Respondent was seeking additional fees from the Connecticut Resident to reapply to the student loan forgiveness program on his behalf.

The State has ordered the company to “Repay $2,805 to the Connecticut debtors identified in Exhibit A attached hereto plus interest and repay to any other Connecticut debtor who entered into an agreement for debt negotiation services with Leonardi Ortiz d/b/a Student Reform Associates on and after October 1, 2009, any fees paid by such Connecticut debtor to Leonardi Ortiz d/b/a Student Reform Associates, plus interest.”